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>>I would like to introduce and
hand the presentation to
Mr. Mark Johnson from
Anthem Blue Cross and
there's your slide Mark.
>>Good morning everyone.
Well the first thing I'm going to do
is provide an overview of the
PPO programs.
Firstly, there are three separate
PPO plans that are self-funded
by CalPERS.
They use us at Anthem Blue
Cross to perform the benefits
administration on the medical
benefits.
And they have Medco provide
the pharmacy benefits
administration activity.
There are three separate plans
as you probably are aware.
The first plan is PERS Care.
That is a plan that's been in
existence the longest.
It does offer the full spectrum of
the Blue Cross network.
It also has the highest coverage.
It's also the highest premium
cost.
PERS Choice is by far the most
popular of the three PPO plans.
Approximately 90% of all the
PPO enrollment of under age 65
members are enrolled in the
PERS Choice plan.
It again has like PERS Care the
full spectrum of the Blue Cross
network and based on our
review, compared to PPO plans
that are offered in the private and
public employer environment, it's
a very competitive plan in both
benefits and in premium cost.
The third plan is the PERS
Select plan.
And this is a plan that was
introduced in January 2008.
It uses a subset of the full Blue
Cross physician network, about
60% of the physicians who are in
our full network are participating
in the Select network.
Now, these are physicians that
we've identified perform more
cost efficient medical care
without compromising quality.
It has the same coverage level
that's available under PERS
Choice and this plan is at a lower
premium cost.
What we are doing, and I'll get
into this in a couple of additional
slides that will be forthcoming, we
are introducing a new concept of
the PERS Select plan in 2011
where we are going to be
introducing a narrower hospital
network.
The similarities between the
three PPO plans is that they all
shared a $500 annual
deductible.
They all feature a $20 office visit
copayment.
They all feature 100% routine
and preventive coverage.
And they all feature a $50
emergency room deductible.
The differences between the
PPO plans is that as PERS Care
is the richest benefit in benefit
coverage, it is basically a 90/10
plan, a 90% coverage level from
the plan, 10% on the members
part after the deductible's been
met.
PERS Choice and PERS Select
are 80/20 plans.
80% co-insurance by the plan,
20% on the members part after
the deductible is met.
PERS Choice and PERS Select
have a maximum amount of
coverage under physical therapy,
where there is no maximum
under PERS Care.
Chiropractic coverage under
PERS Care is richer than is
available under PERS Choice
and PERS Select.
PERS Care offers 20 combined
visits and PERS Choice and
PERS Select 15 visits.
Now, how does a PPO plan work?
Well, basically there's the
$500 calendar year deductible.
Physician office visits, routine
preventive visits, and medication
prescriptions, now they do not
get applied toward the $500
deductibles.
Largely services such as surgery
services, hospitalization, imaging
services, behavior health,
chiropractic, acupuncture, those
are subject to the $500
deductible.
After the deductible's been met,
then the, on the PERS Care
plan, the 90/10 plan
design kicks in.
And for PERS Choice and PERS
Select, it's the 80/20
arrangement.
Now services for non
participating providers on all
three plans is reimbursed at
60%.
All PPO plans that I'm aware of
provide a distinct disincentive for
members to use non
participating providers.
Also an additional items is that
on the maximum out-of-pocket
co-insurance under PERS Care
is limited to $2,000 per year, per
member, and it is $3,000 on
PERS Choice and PERS Select.
In my view, if you have an
employee who's interested in
PPO coverage, I think the
fundamental question they may
want to ask themselves if am I
willing to share more in medical
expenses to have unrestricted
freedom to choose to direct my
medical care.
In my mind, that's the value
proposition of PPO coverage.
You're not assigned a primary
care physician.
You call the shots on where you
go, and who you see.
Granted on a PPO plan, you
have to share more in plan
expenses.
There's a deductible which
obviously is not existing in the
two HMO options.
And there's co-insurance
obligations.
Another thing to keep in mind for
someone interested in PPO
coverage if they tend to have a
healthy year, they'll pay $20 for
routine office visits, their
preventive care is covered at
100% and they would pay
copayments just like an HMO
plan for the medications.
So an individual may have a
relatively healthy year, still see
physician services, receive
medications, and not pay much
more than they would under
HMO coverage.
Now I want to get into some of
the key 2011 benefit changes.
Under the PERS Choice and the
PERS Select plan, as Don
Sherman had mentioned, the two
million dollar lifetime maximum is
being removed.
And this is a provision of health
care reform.
I know for years that the two
million dollar maximum made
people a little bit nervous.
We had very few people who
ever hit the two million dollars,
but effective next year, it will
no longer exist.
We are introducing two new
programs to the PPO programs
in 2011.
First we are introducing a value
based purchasing designed
specifically for hip and knee
joint replacement surgery.
And this will apply to all three
of the PPO plans.
We are introducing a narrow
hospital network to compliment
the narrow physician network
under the PERS Choice plan.
Now the value based purchasing
design program, this is a pilot
program that we have developed
working with the CalPERS board
administration.
One thing that we do at Anthem
Blue Cross in which we in turn
provide to CalPERS staff, is tons
and tons and tons of medical
data.
And one thing is quite apparent
is that knee and hip joint
replacement surgeries are
growing in frequency at an
alarming rate.
On the good news it's providing
a very valuable service to
members but they are very, very
expensive services.
The other thing we've noticed is
that hospitals around the state
charge services their particular
charges for these procedures at
very large disparities in
what they charge.
It's not uncommon in California
to have one hospital charge
$80,000 for their services for a
routine knee or hip joint
replacement surgery, and
another hospital with comparable
quality three miles away may
charge $28,000.
We know that for a fact.
We see all the data.
So what we are trying to do is
develop a way to rein in these
costs.
So what we've done with the
CalPERS board is we are
launching this pilot program.
We have designated 44 facilities
around California, and these are
some of the premier hospital
facilities in the state.
And the way the program is
going to work is that we have
created a threshold of $30,000
payment that these 44 hospitals
will accept in total, other than
members' co-insurance
obligation, for a routine knee or
hip joint replacement.
We will have all these 44
hospitals available to people
online.
There is also going to be a
process in place through the
precertification process if
somebody is proposing to have
this surgery done at a non
designated value based hospital.
Thirty thousand dollars again will
be the threshold amount and if
someone should happen to
make a conscious decision to go
to a facility that is not one of the
44 designed hospitals for this
type of procedure, then, and if
the bill ends up begin beyond
$30,000, they would be
responsible for the difference.
Now the next particular important
benefit change that we are
making, and this is specifically to
the PERS Select plan is that we
are introducing a narrow hospital
network.
Again, the same theme as the
value based program for the
knee and hip joint replacement.
We know that hospitals
throughout the state of California
charge, there's a large variance
of charges for the same exact
services.
This is actually one of the key
theme that CalPERS was
involved with several years ago
with the Sutter system.
Is that they had an outside
consultant identify that the Sutter
system was charging hospital
charges that were 60% higher
than the average hospital
charges throughout the state.
So what we've done at Anthem
Blue Cross is that we're creating
a two-tiered hospital network
design within the PERS Select
plan.
What we are going to do is with a
tier one hospital, and there will
be about 160 hospitals
designated as tier one, that's
about 42% of our entire
statewide hospital network.
These will constitute tier one
facilities in that the existing
co-insurance provisions under the
PERS Select plan, that is $3,000
maximum out-of-pocket on that
80/20 arrangement will remain.
If an individual wishes to have
their medical services done at a
tier two hospital, and again this is
only in the PERS Select plan, the
co-insurance is lowered to 70%
and the maximum out-of-pocket
increases to double the amount,
$6,000 per member, $12,000 per
family.
So clearly there is a disincentive
to use tier two hospitals.
Now you may ask why is this
happening?
Why are you putting this particular
narrow hospital network in?
By doing so, we're able to project
that we'll be able to offer the
PERS Select plan and we have
lower hospital costs.
And what we've done working
with the CalPERS board and
staff is that the premium
differential between PERS Select
and PERS Choice in 2011 will be
13% difference.
So the value proposition is we
can offer an individual the same,
they have access to the same
benefit coverage as PERS
Choice but in using a more cost
efficient physician network, and a
more cost efficient hospital
network, and they are large
networks, that they can have the
identical coverage available at a
13% lower premium cost.
Times are tough and it was, in
discussing how things are
economically, it was stressed to
us that we need to come up with
an idea that will help lower
premium costs.
Overall throughout California, the
PERS Select plan is the lower
cost medical program available
in 2011 in the CalPERS
program.
At Anthem Blue Cross we have
created a shared website with
CalPERS.
This is a picture of what that
particular website address looks
like.
We have loaded a ton of
information on there.
This website has many many
tools that you can use.
One of the key components of
this website is called the
provider finder.
And you'll notice a friendly
physician there on the home
page, if you press on that, that
provides you a link to be able to
identify who are the physicians,
let's say participating in our
network, who are, which
hospitals will constitute the tier
one under the PERS Select plan,
which are the physicians that
participate as Select physicians
under the PERS Select plan.
We've had a lot of success with
this website.
Also on Anthem Blue Cross, we
offer like most medical plans or
medical insurance companies
provide these days, a full array of
disease management programs.
This is all covered under our 360
degree health services program,
along with a future moms
program for high risk
pregnancies.
We also provide a 24/7 nurse
line.
We also provide special offers
and discount programs that are
available through the website.
We also provide other resources
such as a direct link to Web MD.
You can have your own health
record recorded.
You can look up your own claims
status.
We also have the ability through
our Anthem Care comparison
program to actually shop
beforehand before you receive
medical services to see what
comparative hospital costs are.
And that type of tool could help
you reduce what your, say 20%
portion might be under PERS
Choice and PERS Care
coverage or your 10% coverage
under PERS Care.
So in essence we do have a lot
of resources available through
the shared website with
CalPERS.
And again a lot of members have
informed us they find them very
productive and very useful tools
for their use.
Thank you very much.
>>And now we'd like to invite
from Medco Gloria Feldman.
>>Thank you.
My name is Gloria Feldman.
I'm with Medco.
I support the PPO plans for
CalPERS.
Medco provides prescription
drug benefit coverage for the
PERS Care, PERS Choice and
PERS Select plans.
And what I'm going to talk to you
about for the next 15 minutes or
so is I'll go into a little bit about
Medco, I'll go over the categories
of types of medications out there,
we'll talk specifically about the
prescription benefit designed for
CalPERS, and some of the new
items for 2011.
We'll talk about how to use
Medco's mail service pharmacy,
and we'll talk about how
members can access information
about the 2011 plan design
changes.
And then finally we'll talk about
Medco.com and some of the
other tools we offer to your
members.
Okay.
We'll get into a little bit about
Medco now.
Medco provides pharmacy
benefit management for
approximately 65 million
Americans.
And last year we managed
prescriptions, both retail and mail
prescriptions, for about 700
million prescriptions, 100 million
of which were mail order
prescriptions.
And we also partner with
approximately 60,000 retail
pharmacies in our network and
that's nationwide.
Most major chain pharmacies
are in our network as well as
independent pharmacies.
In 2009, just under 27 million
prescriptions were processed
through Medco's website,
Medco.com.
And weekly we're seeing about
12,000 new prescriptions that
come through to be
e-prescriptions.
So we're seeing a trend where
doctors are moving more toward
paperless prescriptions.
One of the things we're really
proud about as a company at
Medco is in 2009 we, excuse me,
in 2010 we captured the number
1 position in the health care
sector on Fortune's most
admired companies list for the
third consecutive year.
In this sector, Medco ranked
number 1 in several attributes
including innovation and quality
of products and services.
And I think that innovation and
quality of services can really be
seen in the next bullet point that
talks about our Medco
pharmacists.
Medco's pharmacists in our mail
services facilities throughout the
company are what we call
specialist pharmacists.
And what that means is they're
specifically trained to support
patients with specific conditions.
For example, diabetes, asthma
or cardiovascular disease.
These pharmacists can work with
patients directly and their doctors
to identify if there's potential
gaps in care in a patient's
therapy and help them to resolve
those various gaps in care.
And we find that it results in
overall improved quality of
service for our members.
Now we'll move in and talk about
different drug types.
The first drug type I want to talk
about is preferred brand
medications.
Preferred brand medications are
preferred by the plan and are
based on an independent clinical
review board decision.
These are typically brand
medications that only have one
manufacturer.
That manufacturer holds the
patent on that medication and
there are no other equivalent
products out in the marketplace.
No generics for example.
An example of this type of a drug
would be Crestor or Lipitor.
The next type of drug I want to
talk about is non preferred brand
medications.
These are medications also
determined by an independent
clinical review board.
However, these products do
have alternatives out in the
marketplace.
They either have a generic
product available or other
alternative brand name products
available.
So if there are multiple points of
access for the product, that
typically the originally branded
product then moves to what we
call a non preferred status.
And ultimately take s a higher
copayment than a preferred or
generic medication.
The type of drug I'll talk about is
generic medications and these
are available from multiple
manufacturers and they're
significantly less costly than
brand medications.
Generics are considered to be
safe and effective as their brand
name counterparts and they
have the same active ingredients
as the brand name medications.
We'll move to over-the-counter
products.
Over-the-counter products are
not covered under the PERS
PPO plans with the exception of
diabetic test strips, insulin and
lancets.
Several prescription drugs have
recently gone over-the-counter.
You may have seen commercials
on television for these.
They include products like
Claritin, Prilosec and Zyrtec.
And one of the items I want to
highlight here is new for 2011, is
prescription medications with an
over-the-counter alternative are
not covered and there's a little
typo here in this presentation.
It says over-the-counter
equivelant, but it's actually over-
the-counter alternative products
will no longer be covered in
2011.
The next type of drug, and final
drug type I'll talk about today is
specialty drugs.
These are typically high cost
medications that require
sometimes injection or
intravenous infusion.
They require safety monitoring
typically.
They might require special
training needs and coordination
of care.
Could have unique handling and
storage requirements such as
refrigeration.
And they're often used to treat
patients living with severe or
chronic conditions such as
multiple sclerosis or hemophilia.
A common specialty medication
you might have heard of or seen
on television is Embril which is
used to treat rheumatoid arthritis.
Medco has our specialty
pharmacy called Acredo that
works directly with patients who
have these types of chronic
conditions and require specialty
medications to ensure that
they're getting these medications
in a, in the proper timeframe with
the proper training and care, so
that they're staying consistent
with their therapy.
Now we'll move into some of the
specific plan design information
for the PPO plans.
We'll move to the copay chart
here.
And you'll see the first two
columns in the copay chart
represent retail copayments.
The only difference on the
prescription drug plan between
the PERS Care, PERS Choice
and PERS Select plans is the
day supply allowance at retail.
PERS Care allows up to a 34
day supply at retail, whereas
Choice and Select allow up to a
30 day supply.
Other than that distinction, the
plans are the same across the
board.
So the generic copayments at
retail for short-term medications
can be seen in the first column
and that's a $5 generic
copayment, $15 preferred brand
copayment, and a $45 non
preferred brand copayment.
And I'm going to leave the last
line to talk about at the end of
this slide.
The second column represents
the copayments for maintenance
medications at retail.
After the first two fills at retail,
members are subject to a higher
copayment on maintenance
medications.
We like to encourage to switch
those medications over to mail
order.
They get a 90 day supply for the
same copay they would be
paying after that second fill at
retail.
And so they're ally saving a lot of
money if they choose to move to
mail order.
So the copayments on the
maintenance supplies at retail at
$10 for generics, $25 for
preferred brands and $75 for non
preferred brands.
And you'll see those amounts
mirror the amounts in the mail
order column so we highly
encourage members to switch
those maintenance medications
over to mail.
The last line in the chart
references lifestyle medications,
or you'll probably hear it
described as discretionary
medications.
This is one of the new items for
2011.
There will be a 50% co-insurance
on these medications across the
board at both retail and mail and
some examples of dictionary
medications are ***, Levitra
and Cialis, the erectile
dysfunction drugs.
We'll move down to the next
slide which talks a little bit
more about copays.
The PPO plans have an out-of-
pocket at mail on the prescription
benefit.
It's $1,000 per calendar year per
patient.
And once the member or patient
I should say, incurs $1,000 out-
of-pocket at mail, the copayment
is reduced to zero for the
remainder of the year.
One of the new items that I want
to highlight for 2011 is that non
preferred brand medications will
be excluded from that out-of-
pocket maximum.
So starting in 2011 only generic
medications and preferred brand
medications will count towards
the members out-of-pocket max
at mail.
I just want to point out that some
perscriptions may require prior
authorization for use.
And upon approval, some non
preferred medications can be
eligible for a partial copay waiver.
There's a new item that I also
want to point out for 2011, and
that is if the partial copay waiver
is granted for the non preferred
medication at retail the
copayment is $40 and $70 at
mail.
This is essentially a $5 increase
from what is currently in place
today.
Okay.
I think we can move to the
preferred drug list slide.
We'll talk a little bit about the
preferred drug list, it's also
known as the formulary.
A formulary is a list of generic
and brand name drugs that are
preferred by the plan.
The formulary list offers
members a choice while keeping
the cost of the prescription drug
benefit affordable to both the
member and the plan.
The list is developed by a clinical
committee of national medical
experts, and the committee is
made up of pharmacists and
physicians who meet on a
quarterly basis to make updates
to the preferred drug list or
formulary.
When there's changes to the
formulary that would impact a
member by increasing a copay
because perhaps their drug was
at a preferred brand copayment
previously and now it's going to
be considered non preferred, we
do do member notification to let
them know that the higher copay
will be applying.
Members can get information
about the preferred drug list or
the formulary on our website at
www.medco.com or they can
always contact our customer
service representatives and we
can mail them a formulary guide
as well.
The next thing I want to talk
about is getting started with mail
order prescriptions.
Mail order is a really important
part of the benefit and we really
encourage members to use mail
order.
The way that they get started is
by asking their doctor to
prescribe a 90 day supply of their
long-term medications and then
refills for up to one year if
that's appropriate.
They can either send the
prescription to Medco, the patient
can send it by mail or the doctor
can send it in my fax or by the
e-prescription I talked about a
little bit earlier.
Members can get a mail order
form from the Medco website or
also by calling Medco's customer
service.
Once we receive a prescription it
typically arrives, we like to
encourage members to have at
least a 14 day supply on hand
when they're ordering their first
mail order prescription.
We don't want there to be any
interruption of therapy.
So typically a prescription takes
14 days to arrive for new
prescriptions and 8 days for
refills.
I'm sorry, it's new prescription
are delivered in 8 days and 3 to
5 days for refills.
Members can pay via multiple
methods, check, credit card,
money order and standard
shipping is free.
Refills can be ordered by the
phone or on the website.
And packaging of the medication
is typically sent in tamper-proof
packages through US mail and
includes some literature along
with the prescription.
One thing I want to highlight
here, and I think I'm running a bit
short on time, which is how to,
how members can get
information about their
prescription benefit before
January 1.
So they want to know what the
plan has to offer to help them
make a decision and making
their plan choice for the
beginning of the year.
We have two features that can
do that.
Basically members can call
Medco member services and
speak to press 1 to speak to an
open enrollment representative.
This will direct them to a
specialist who can answer
specific questions about the
2011 plan design coverage.
They can also go to a special
open enrollment website that we
have up at Medco.com/calpers.
On the right hand nav bar,
on that website is a section
where members can access
more information about the
prescription benefit.
Thank you for your time today.